The L Funds, or "Lifecycle" funds, use professionally determined investment mixes that are tailored to meet investment objectives based on various time horizons. The objective is to strike an optimal balance between the expected risk and return associated with each fund.
The L Funds' strategy is to invest in an appropriate mix of the G, F, C, S, and I Funds for a particular time horizon, or target retirement date. The investment mix of each L Fund becomes more conservative as its target date approaches.
The strategy assumes that:
Each of the L Funds has a target asset allocation. In other words, each is made up of the combination of the five individual TSP funds (G, F, C, S, and I) that maintains an optimal balance of investment risks and rewards for a particular time horizon.
Each quarter, the L Funds' target asset allocations change, moving towards a less risky mix of investments as the target date approaches. So if you are invested in one of the L Funds, you will notice that as you get closer to your target date, your allocation to the riskier TSP funds will get smaller while your allocation to the more conservative G Fund gets larger.
The rate of change in the target asset allocation is small when the L Fund target dates are distant. The rate increases as the funds approach their target dates. For a visual representation of how the asset allocations change over time, click the individual L Fund tabs at the top of this page.
When an L Fund has reached its target date, it will be rolled into the L Income Fund.
The L Income Fund:
The progression from a target date L Fund to the L Income Fund is automatic - you don't have to do anything.
New Lifecycle funds will be added for distant target dates as they are needed.
When you invest in the L Funds:
The L Funds simplify fund selection. You choose the fund that is closest to your target date (or, if your target date falls between the target dates that are offered, you can split your account between the two target date funds closest to your time horizon).
When you invest in the L Funds:
How Can I Use the L Funds in my TSP Account?
Use the L Funds if you are looking for a simple, low maintenance way of investing money in your TSP account. The L Funds make the investing process easy for you because you do not have to figure out how to diversify your account or how and when to rebalance.
The L Funds are designed so that 100% of your TSP account can be invested in the single L Fund that most closely matches your time horizon (or in the two L Funds closest to your time horizon). Any other use of the L Funds may result in a greater amount of risk in your portfolio than is necessary in order to achieve the same expected rate of return.
How to Invest in the L Funds
Determine the date when, after leaving Federal service, you will need the money that is in your TSP account. Then identify the L Fund that matches your target date:
To invest in the L Fund of your choice:
Need more info?
For more detailed information about the L Funds, see the L Funds Information Sheet.
The progression from a target date L Fund to the L Income Fund is automatic — you don't have to do anything.